FXStreet (Edinburgh) – In the opinion of analysts at Danske Bank, the subsequent pace of CNY depreciation should be lower in the next weeks.
Key Quotes
“The People’s Bank of China (PBoC) both through intervention and a press briefing overnight indicated that it will manage the exchange rate and will only gradually move towards a floating exchange rate”.
“The bank raised the USD/CNY fixing today by 1.1% to 6.401 which again is consistent with the new market-based fixing method it announced earlier in the week”.
“At a press briefing this morning deputy governor Yi Gang said that the PBoC will step in when the market is “distorted” and that managed exchange rate fluctuations suit China well”.
“However, Yi also said the PBoC has stopped intervention as “a normal operation” and that its aim in the long run is a market-determined rate. Yi’s comment suggests that this has not been a “big bang” adjustment towards a floating exchange rate but it will be a gradual and managed process. This suggests that the pace of depreciation of CNY will now at least slow substantially”.
(Market News Provided by FXstreet)